© 2005 connecterra, inc. rfid and the electronic product code

© 2005 ConnecTerra, Inc.

RFID and the Electronic Product Code

MIT Enterprise ForumRFID SIG

October 3, 2005

Kenneth R. Traub, PhDCTO, ConnecTerra Inc.


Speaker Background

• CTO of ConnecTerra, Inc.– ConnecTerra makes infrastructure software for RFID

and other device computing applications

• Leader in EPCglobal, the worldwide standards body for RFID and Electronic Product Code technology:– Co-founder of Software Action Group– Co-author of most EPCglobal software specs– Member of EPCglobal Architecture Review

Committee


Agenda

• EPC / RFID – vision

• EPCglobal Standards

• Current Deployments– Retailer– Supplier

• Business Benefits


Auto-ID Vision

• The Electronic Product Code (EPC)– Gives a unique identity to individual physical

objects: items, cases, pallets, locations, loads, assets, etc

• Radio Frequency Identification (RFID)– Cheap sensing of object EPC codes

• The Yin and the Yang– EPC enables new, value-creating business

processes– RFID makes those processes

practicalEPC

RFID


Application: Retail Promotions

• Give unique EPC to each case of promotion-packaged item, on RFID tag

• Equip facilities with RFID readers: loading dock doors, trucks, retail back-room door, dumpster

• Can now measure & drive promotion:– Timeliness: is promotional packaging reaching consumer in

time?– Effectiveness: is promotional item selling better?

Manufacturing Mfr’s Distribution

Center

Retail Store

Retailer’sDistribution

Center


Store

Typical CPG Use Case

Dist Ctr

Manufacturer Retailer

Store

Store

Dist Ctr

Dist Ctr

Dist Ctr

Factory

Q: when does product reach sales floor? Q: when was missing product shipped?


Key Standards

• Electronic Product Code (EPC)– Unique identity to physical objects

• RFID tag/reader protocol– Tag applied by Company A readable by

Company B

• EPC Information Services (EPCIS)– Exchange of detailed information about EPC

observations between trading partners


Electronic Product Code

• Every item has distinct serial number• Capacity for 200 billion serial numbers per

item class (on 96-bit tag)• New business processes based on tracking

individual things

1732050807+

Company Code Product Code Unique Serial Number

= EPC


EPC Information Services (EPCIS)

• Exchange of business-level EPC data:– “What, where, when, and why”– At business process level– Within enterprise and across enterprises

• Key technical challenges:– Generate data in form meaningful to partners– Create value through data exchange


Data Creation Example – Palletizer

Reader

Filtering & Collection

PalletizerCapture App

EnterpriseApp

Reader Protocol

Reader

ALE

EPCIS

dozens of individual tag read events from specific antenna

“between the time the case crossed the first beam and the second beam at location L, the following tag was read”

“at time T, the association of the following case tags to the following pallet tag was created at palletizer #3, to fulfill order #1234”

R R

What, Where, When

What, Where, When, Why


EPC-enabled Operational Processes

Warehouse Shelving:RFID-enabled

“Smart Space”

Forklift:RFID-enabled

“Smart Mover”

Loading Dock Door:RFID-enabled“Smart Portal”

RFID Tag@Ship Workstation


EPCIS Events

EPC Capture Apps

RFID Capture Apps

Palletizer Portal Portal Portal PortalShelving

CommissionObserve

ObserveAggregate

Observe Observe ObserveDisaggregate

ObserveObserve

Doorway

Observe


Dist Ctr Dist Ctr Store

Tagging Station


EPCIS Events

EPC Data – A Global Resource

CommissionObserve

ObserveAggregate

Observe Observe ObserveDisaggregate

ObserveObserve Observe


Dist Ctr Dist Ctr Store

Global EPC Data

Global EPC Data

Case #123 of Cherry Hydro

2/5 1:23pm Mfr DC #2 Shipping

2/7 4:28am Retail Store #5 back room

Receiving

2/8 5:23pm Retail Store #5 front room

Observe


Challenges Addressed in Current Pilots

• EPCIS data must be meaningful to partners

– Capture apps must abstract away from operational details.

• Partners must share understanding– Agreed terminology for business steps

(“receiving”)

– Master data to interpret location identifiers (“store #23 back room”)

• Global EPCIS “cloud” implemented by data exchange operations

Dist Center

EPCIS Association Event Time 3:14pm 1/1/2005 EPCs 123, 124, 125, … Location DC #2 inbound Biz Step Receiving

Data Center

EPCIS Repository

EPCIS Capture Interface

EPCIS Query Interface

Internal Apps

Data Center

EPCIS Repository

EPCIS Capture

EPCIS Query

Internal Apps



How This Works Today (CPG)

• Large retailers require case- and pallet-level EPCs on RFID tags– Wal*Mart, Target, Albertsons, …

• 200+ suppliers currently comply• Retailer ROI:

– Improved operational efficiency within own walls

• Supplier ROI:– Several opportunities based on retailer-

provided data


CPG Retailer Supply Chain – Supplier’s View

Supplier Retailer

Factory Distribution Ctr Distribution Ctr

Retail Stores

EPC Database

EPC Database

1. EPC data collected during tagging and

shipping2. EPC observations collected as product moves

3. Retailer data shared with supplier via retailer’s network

4. Combined data used to gain business benefits


Dist Center

Deployment View – Retailer Example

Retail Store

Retail Store

Enterprise-wide Data Center

Rdr Mware Portal

EPCISTrading partners

EPCIS CaptureALERdr Prot

EPCIS Capture

EPCIS Query


Deployment View – Supplier Example

• Focus for suppliers is getting tags onto products. Not as simple as it sounds…

• Tag@Ship– Least invasive, enabled per shipment

• Tag@Pick– Also enabled per shipment, less material

handling

• Tag@Source– Least labor, but all customers receive tags


Tagging Process – Phase 1

Factory

Tag Printing Station

Distribution Center

Sort Lane

PickingStation

Sorter1. Product warehoused

2. Case EPC labels printed, stored on rolls

3. Labels applied during pick 4. Sorted by barcode

5. EPCs read and associated

6. Pallet EPC label printed

7. Pallet shipped

ConnecTerra Middleware &

Tagging Software

WMS

R

P


Tagging Process – Phase 2

Factory


Distribution Center

Sort Lane

PickingStation



3. Labels applied during pick 4. Sorted by barcode

5. EPCs read and associated


7. Pallet shipped


Tagging Software

WMS

R

P

4. Sorted by RFID and associated


6. Pallet shipped


Tagging Process – Phase 3 (long term)

Factory


Distribution Center

Sort Lane

PickingStation



3. Labels applied during pick


Tagging Software

WMS

P


Packaging Mfr

1. Case EPC labels delivered on packaging

2. Product warehoused



6. Pallet shipped


5. Pallet shipped

R

R

R R

Additional visibility


Supplier Benefits – Increased In-stock

• Key performance indicator for supplier: are goods in stock at retail stores?– Can’t sell product if it’s not where the consumer can

find it– Key metric for retailer’s rating of supplier

• Supplier believes an increase in their in-stock rate is possible by using EPC data to examine supply chain:– Gather ~6 months of baseline data– Alert if deviation arises; e.g., abnormal delay in

shipping from retailer DC to retailer store– Take appropriate action in response to alert


Supplier Benefits –Discrepancy Reconciliation

• Discrepancy arises when shipment contents not immediately confirmed; e.g., concern that– Wrong product shipped– Too few products shipped

• Most resolved successfully, but resolution process takes time

• Within two months of commencing RFID operations:– Far fewer than the usual 80% of RFID shipments reported

discrepancies– Several shipments with discrepancies had retailer reads minutes to file for resolution, instead of days


Supplier Benefits –New Product / Promotions Execution

• Large manufacturer sees only 70% of promotional displays reaching sales floor in time to coincide with advertising.

• Merely tagging display items yields instant ROI:– Recovery of incentive fees paid to retailers– Better prediction of transit time to store front– Ability to course-correct mid-promotion


Summary

• EPC and RFID a reality in CPG supply chain today– Most suppliers to major retailers in compliance– Many tagging every SKU– Retailers sharing data to suppliers

• Immediate benefits from RFID/EPC data sharing:– Increased In-Stock Percentage– Reduced discrepancies– Illumination of inside of supply chain– New product / promotions

• Longer-term benefits expected:– Increased in-stock– Increased operational efficiency

• Obstacles:– Tag cost – Emerging Technology